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Notice

Federal Need Analysis Methodology for the 2012-2013 Award Year

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Notice Of Revision Of The Federal Need Analysis Methodology For The 2012 2013 Award Year.

Summary

The Secretary announces the annual updates to the tables that will be used in the statutory “Federal Need Analysis Methodology” to determine a student's expected family contribution (EFC) for award year 2012-2013 for the student financial aid programs authorized under title IV of the Higher Education Act of 1965, as amended (HEA). An EFC is the amount that a student and his or her family may reasonably be expected to contribute toward the student's postsecondary educational costs for purposes of determining financial aid eligibility. The Title IV programs include the Federal Pell Grant, Federal Perkins Loan, Federal Work-Study, Federal Supplemental Educational Opportunity Grant, William D. Ford Federal Direct Loan, and the Teach Grant Programs (Title IV, HEA Programs).

 

Table of Contents Back to Top

Tables Back to Top

Overview Information:

[CFDA Numbers 84.063; 84.038; 84.033; 84.007; 84.268; 84.379].

Federal Need Analysis Methodology for the 2012-2013 award year; Federal Pell Grant, Federal Perkins Loan, Federal Work-Study, Federal Supplemental Educational Opportunity Grant, William D. Ford Federal Direct Loan, and TEACH Grant Programs.

FOR FURTHER INFORMATION CONTACT: Back to Top

Ms. Marya Dennis, Management and Program Analyst, U.S. Department of Education, room 63G2, Union Center Plaza, 830 First Street, NE., Washington, DC 20202-5454. Telephone: (202) 377-3385.

If you use a telecommunications device for the deaf (TDD), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.

Individuals with disabilities can obtain this document in an accessible format (e.g., braille, large print, audiotape, or computer diskette) on request to the contact person listed under FOR FURTHER INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION: Back to Top

Part F of Title IV of the HEA specifies the criteria, data elements, calculations, and tables used in the Federal Need Analysis Methodology EFC calculations.

Section 478 of part F of title IV of the HEA requires the Secretary to adjust four of the tables—the Income Protection Allowance, the Adjusted Net Worth of a Business or Farm, the Education Savings and Asset Protection Allowance, and the Assessment Schedules and Rates—each award year for general price inflation. The changes are based, in general, upon increases in the Consumer Price Index.

For award year 2012-2013, the Secretary is charged with updating the income protection allowance for parents of dependent students, adjusted net worth of a business or farm, and the assessment schedules and rates to account for inflation that took place between December 2010 and December 2011. However, because the Secretary must publish these tables before December 2011, the increases in the tables must be based upon a percentage equal to the estimated percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U) for 2011. The Secretary must also account for any misestimation of inflation for the prior year. In developing the table values for the 2011-2012 award year, the Secretary assumed a 1.2 percent increase in the CPI-U for the period December 2009 through December 2010. Actual inflation for this time period was 1.4 percent. The Secretary estimates that the increase in the CPI-U for the period December 2010 through December 2011 will be 0.8 percent. Additionally, section 601 of the College Cost Reduction and Access Act of 2007 (CCRAA, Pub. L. 110-84) amended sections 475 through 478 of the HEA by updating the procedures for determining the income protection allowance for dependent students, as well as the income protection allowance tables for both independent students with dependents other than a spouse, and independent students without dependents other than a spouse. As amended by the CCRAA, the HEA now includes new 2012-2013 award year values for these income protection allowances. The updated tables are in sections 1, 2, and 4 of this notice.

The Secretary must also revise, for each award year, the education savings and asset protection allowances as provided for in section 478(d) of the HEA. The Education Savings and Asset Protection Allowance table for award year 2012-2013 has been updated in section 3 of this notice.

Section 478(h) of the HEA also requires the Secretary to increase the amount specified for the Employment Expense Allowance, adjusted for inflation. This calculation is based upon increases in the Bureau of Labor Statistics budget of the marginal costs for a two-worker family compared to a one-worker family for food away from home, apparel, transportation, and household furnishings and operations. The Employment Expense Allowance table for award year 2012-2013 has been updated in section 5 of this notice.

The HEA provides for the following annual updates:

1. Income Protection Allowance (IPA). This allowance is the amount of living expenses associated with the maintenance of an individual or family that may be offset against the family's income. It varies by family size. The IPA for the dependent student is $6,000. The IPAs for parents of dependent students for award year 2012-2013 are:

The IPAs for independent students with dependents other than a spouse for award year 2012-13 are:

Parents of Dependent Students Back to Top
Family size Number in college
1 2 3 4 5
For each additional family member add $3,930.
For each additional college student subtract $2,790.
2 $16,390 $13,590
3 20,410 17,620 $14,820
4 25,210 22,400 19,620 $16,810
5 29,740 26,940 24,150 21,340 $18,560
6 34,790 31,990 29,200 26,390 23,600
Independent Students With Dependents Other Than a Spouse Back to Top
Family size Number in college
1 2 3 4 5
For each additional family member add $5,660.
For each additional college student subtract $4,020.
2 $23,630 $19,590
3 29,420 25,400 $21,360
4 36,330 32,300 28,280 $24,230
5 42,870 38,820 34,800 30,770 $26,750
6 50,130 46,100 42,090 38,030 34,020

The IPAs for single independent students and independent students without dependents other than a spouse for award year 2012-13 are:

Marital status Number in college IPA
Single 1 $9,330
Married 2 9,330
Married 1 14,960

2. Adjusted Net Worth (NW) of a Business or Farm. Aportion of the full net worth (assets less debts) of a business or farm is excluded from the calculation of an expected contribution because—(1) The income produced from these assets is already assessed in another part of the formula; and (2) the formula protects a portion of the value of the assets. The portion of these assets included in the contribution calculation is computed according to the following schedule. This schedule is used for parents of dependent students, independent students without dependents other than a spouse, and independent students with dependents other than a spouse.

If the Net Worth (NW) of a business or farm is— Then the Adjusted Net Worth is—
Less than $1 $0
$1 to $115,000 $0 + 40% of NW
$115,00 to $350,000 $46,000 + 50% of NW over $115,000
$350,001 to $585,000 $163,500 + 60% of NW over $350,000
$585,001 or more $304,500 + 100% of NW over $585,000

3. Education Savings and Asset Protection Allowance. This allowance protects a portion of net worth (assets less debts) from being considered available for postsecondary educational expenses. There are three asset protection allowance tables—one for parents of dependent students, one for independent students without dependents other than a spouse, and one for independent students with dependents other than a spouse.

Dependent Students Back to Top
If the age of the older parent is And they are
Married Single
Then the education savings and asset protection allowance is—
25 or less $0 $0
26 2,400 800
27 4,900 1,700
28 7,300 2,500
29 9,700 3,400
30 12,200 4,200
31 14,600 5,100
32 17,000 5,900
33 19,500 6,800
34 21,900 7,600
35 24,300 8,500
36 26,800 9,300
37 29,200 10,200
38 31,600 11,000
39 34,100 11,900
40 36,500 12,700
41 37,500 13,000
42 38,400 13,300
43 39,300 13,600
44 40,300 13,900
45 41,300 14,200
46 42,300 14,500
47 43,400 14,900
48 44,400 15,200
49 45,500 15,600
50 46,600 16,000
51 48,000 16,300
52 49,200 16,700
53 50,700 17,100
54 51,900 17,500
55 53,400 17,900
56 54,700 18,500
57 56,300 18,900
58 58,000 19,400
59 59,700 19,900
60 61,400 20,400
61 63,100 20,900
62 65,000 21,500
63 66,800 22,100
64 68,700 22,700
65 or older 71,000 23,300
Independent Students Without Dependents Other Than a Spouse Back to Top
If the age of the student is And they are
Married Single
Then the education savings and asset protection allowance is—
25 or less $0 $0
26 2,400 800
27 4,900 1,700
28 7,300 2,500
29 9,700 3,400
30 12,200 4,200
31 14,600 5,100
32 17,000 5,900
33 19,500 6,800
34 21,900 7,600
35 24,300 8,500
36 26,800 9,300
37 29,200 10,200
38 31,600 11,000
39 34,100 11,900
40 36,500 12,700
41 37,500 13,000
42 38,400 13,300
43 39,300 13,600
44 40,300 13,900
45 41,300 14,200
46 42,300 14,500
47 43,400 14,900
48 44,400 15,200
49 45,500 15,600
50 46,600 16,000
51 48,000 16,300
52 49,200 16,700
53 50,700 17,100
54 51,900 17,500
55 53,400 17,900
56 54,700 18,500
57 56,300 18,900
58 58,000 19,400
59 59,700 19,900
60 61,400 20,400
61 63,100 20,900
62 65,000 21,500
63 66,800 22,100
64 68,700 22,700
65 or older 71,000 23,300
Independent Students With Dependents Other Than a Spouse Back to Top
If the age of the student is And they are
Married Single
Then the education savings and asset protection allowance is—
25 or less $0 $0
26 2,400 800
27 4,900 1,700
28 7,300 2,500
29 9,700 3,400
30 12,200 4,200
31 14,600 5,100
32 17,000 5,900
33 19,500 6,800
34 21,900 7,600
35 24,300 8,500
36 26,800 9,300
37 29,200 10,200
38 31,600 11,000
39 34,100 11,900
40 36,500 12,700
41 37,500 13,000
42 38,400 13,300
43 39,300 13,600
44 40,300 13,900
45 41,300 14,200
46 42,300 14,500
47 43,400 14,900
48 44,400 15,200
49 45,500 15,600
50 46,600 16,000
51 48,000 16,300
52 49,200 16,700
53 50,700 17,100
54 51,900 17,500
55 53,400 17,900
56 54,700 18,500
57 56,300 18,900
58 58,000 19,400
59 59,700 19,900
60 61,400 20,400
61 63,100 20,900
62 65,000 21,500
63 66,800 22,100
64 68,700 22,700
65 or older 71,000 23,300

4. Assessment Schedules and Rates. Two schedules that are subject to updates, one for parents of dependent students and one for independent students with dependents other than a spouse, are used to determine the EFC toward educational expenses from family financial resources. For dependent students, the EFC is derived from an assessment of the parents' adjusted available income (AAI). For independent students with dependents other than a spouse, the EFC is derived from an assessment of the family's AAI. The AAI represents a measure of a family's financial strength, which considers both income and assets.

Parents' contribution for a dependent student is computed according to the following schedule:

If AAI is— Then the contribution is—
Less than −$3,409 −$750
($3,409) to $14,600 22% of AAI
$14,601 to $18,400 $3,212 + 25% of AAI over $14,600
$18,401 to $22,100 $4,162 + 29% of AAI over $18,400
$22,101 to $25,900 $5,235 + 34% of AAI over $22,100
$25,901 to $29,600 $6,527 + 40% of AAI over $25,900
$29,601 or more $8,007 + 47% of AAI over $29,600

The contribution for an independent student with dependents other than a spouse is computed according to the following schedule:

If AAI is— Then the contribution is—
Less than −$3,409 −$750
($3,409) to $14,600 22% of AAI
$14,601 to $18,400 $3,212 + 25% of AAI over $14,600
$18,401 to $22,100 $4,162 + 29% of AAI over $18,400
$22,101 to $25,900 $5,235 + 34% of AAI over $22,100
$25,901 to $29,600 $6,527 + 40% of AAI over $25,900
$29,601 or more $8,007 + 47% of AAI over $29,600

5. Employment Expense Allowance. This allowance for employment-related expenses, which is used for the parents of dependent students and for married independent students, recognizes additional expenses incurred by working spouses and single-parent households. The allowance is based upon the marginal differences in costs for a two-worker family compared to a one-worker family for food away from home, apparel, transportation, and household furnishings and operations.

The employment expense allowance for parents of dependent students, married independent students without dependents other than a spouse, and independent students with dependents other than a spouse is the lesser of $3,600 or 35 percent of earned income.

6. Allowance for State and Other Taxes. The allowance for State and other taxes protects a portion of the parents' and students' income from being considered available for postsecondary educational expenses. There are four categories for State and other taxes, one each for parents of dependent students, independent students with dependents other than a spouse, dependent students, and independent students without dependents other than a spouse. Section 478(g) of the HEA directs the Secretary to update the tables for State and other taxes after reviewing the Statistics of Income file data maintained by the Internal Revenue Service.

State Parents of dependents and independents with dependents other than a spouse Dependents and independents without dependents other than a spouse
Percent of total income All (%)
Under $15,000 $15,000 & up
Alabama 3 2 2
Alaska 2 1 0
Arizona 5 4 3
Arkansas 4 3 3
California 8 7 5
Colorado 5 4 3
Connecticut 8 7 5
Delaware 5 4 4
District of Columbia 8 7 6
Florida 4 3 1
Georgia 6 5 4
Hawaii 5 4 4
Idaho 5 4 4
Illinois 5 4 2
Indiana 4 3 3
Iowa 5 4 3
Kansas 5 4 3
Kentucky 6 5 4
Louisiana 4 3 2
Maine 6 5 4
Maryland 9 8 6
Massachusetts 7 6 4
Michigan 5 4 3
Minnesota 7 6 5
Mississippi 3 2 2
Missouri 5 4 3
Montana 5 4 3
Nebraska 5 4 3
Nevada 3 2 1
New Hampshire 5 4 1
New Jersey 9 8 5
New Mexico 3 2 2
New York 10 9 7
North Carolina 6 5 4
North Dakota 3 2 1
Ohio 6 5 4
Oklahoma 4 3 3
Oregon 8 7 5
Pennsylvania 6 5 3
Rhode Island 7 6 4
South Carolina 5 4 4
South Dakota 2 1 1
Tennessee 2 1 1
Texas 3 2 1
Utah 5 4 4
Vermont 6 5 3
Virginia 6 5 4
Washington 4 3 1
West Virginia 3 2 3
Wisconsin 8 7 4
Wyoming 2 1 1
Other 3 2 3

Electronic Access to This Document: You can view this document, as well as all other documents of this Department published in the Federal Register, in text or Adobe Portable Document Format (PDF) on the Internet at the following site: http://www.ed.gov/news/fedregister. To use PDF you must have Adobe Acrobat Reader, which is available free at this site.

Note:

The official version of this document is the document published in the Federal Register. Free Internet access to the official edition of the Federal Register and the Code of Federal Regulations is available on GPO Access at: http://www.gpoaccess.gov/nara/index.html.

(Catalog of Federal Domestic Assistance Numbers: 84.063 Federal Pell Grant Program; 84.038 Federal Perkins Loan Program; 84.033 Federal Work-Study Programs; 84.007 Federal Supplemental Educational Opportunity Grant Program; 84.268 William D. Ford Federal Direct Loan Program; 84.379 TEACH Grant Program)

Program Authority: Back to Top

Dated: May 19, 2011.

James Runcie,

Deputy Chief Operating Officer, Federal Student Aid.

[FR Doc. 2011-12812 Filed 5-23-11; 8:45 am]

BILLING CODE 4000-01-P

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